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Ericsson Seeks Contempt Of Court Proceedings Against RCom

Ericsson files contempt of court proceedings against RCom for not paying dues.

Anil Ambani, attends a signing ceremony between in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)
Anil Ambani, attends a signing ceremony between in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)

Ericsson India Pvt. Ltd. filed contempt of court proceedings against Anil Ambani’s Reliance Communications Ltd. for not paying Rs 550 crore pending dues within the Sept. 30 deadline set by the Supreme Court.

The telecom network equipment maker, a vendor to RCom, also sought orders from the apex court asking the government to stop Ambani and other senior officials of the company from leaving the country, according to the petition filed in the Supreme Court. BloombergQuint has reviewed a copy of the petition.

The top court had on Aug. 3 said RCom is expected to repay Rs 550 crore as a settlement amount against Ericsson’s Rs 1,600-crore dues. The court set the Sept. 30 deadline and said it would hear the matter again on Oct. 4. In the meantime, the court put the insolvency proceedings initiated in May against RCom by Ericsson on hold, allowing the company to sell its telecom business to Mukesh Ambani’s Reliance Jio Infocomm Ltd.

RCom, in an exchange filing on Oct. 2, however, said that it has been unable to repay Ericsson’s dues because the Department of Telecommunications was creating obstacles. The DoT has “unjustly sought securitisation of alleged demands (which are wholly disputed) for spectrum usage charges amounting to Rs 2,900 crore.”

The company filed an application with the Supreme Court on Sept. 30, seeking 60 more days to repay Ericsson. RCom, the filing said, will abide by the orders the court passes on Oct. 4.

Ericsson India alleged that by not repaying the dues within the stipulated timeframe, RCom had committed contempt of court. And, according to Ericsson, the company’s financial creditors including State Bank of India had received the “amount worth thousands of crores” through sale of assets of RCom and two of its subsidiaries—Reliance Telecom Ltd. and Reliance Infratel Ltd.

Lenders to RCom were expected to recover up to Rs 37,000 crore through sale of assets to Reliance Jio and implementation of restructuring schemes.

Ericsson, in its petition, demanded that its Rs 550 crore should be immediately repaid and proceedings under the Insolvency and Bankruptcy Code should be initiated against RCom and its subsidiaries.